HEADLINES
Australia set for airline shake-up
The Australian Government has set the stage for a whole
sale transformation of the Aus
tralasian airline industry after
giving its approval to a merger
between Qantas and domestic
carrier Australian Airlines. Can
berra has also agreed, to the
formation of a single aviation
market with New Zealand.
The decision, announced by
Prime Minister Paul Keating on
2 June, includes the 100%
privatisation of the newly
merged airline, which will retain
the Qantas name. Foreign com
panies will be allowed to buy up
to 35%, with the Government
retaining a "golden share".
Under the scheme, which is
subject to approval by the ruling
Labor Party, Qantas will pay the
Government AS400 million
(S293 million) for 100% of Aus
tralian, which will continue to
operate as a domestic subsidiary.
Australia's other major domes
tic carriers, Ansett and EastWest
(owned by Ansett), will be al
lowed to apply for overseas
routes. Ansett, owned by TNT
and the News Corporation, ex
pected to respond by seeking an
international partner to help
fund the launch of services into
the Far East market.
The subsequent Qantas priva
tisation should return "well over
A$l billion" to the Government
budget, Keating says, with a
likely target of A$1.6 billion.
Qantas chief executive John
Ward believes the price could
touch AS2.5 billion. The new
Qantas would have a turnover of
around A$5.5 billion, placing it
about 15th in the world league
of airlines.
The Government's task force
on asset sales, which has already
solicited potential investors on
two previous occasions, is now-
preparing to issue a third re
quest for "expressions of inter
est" in the new company.
The Government will press
ahead with its original intention
to sell 49% of Qantas through a
trade sale later this year, but the
remaining 51% will be floated
publicly in the first half of 1993.
Qantas has welcomed the
Government's change in direc
tion. Airline chairman Bill Dix
says that he is
"...delighted
that the Gov
ernment recog
nises that its
return...will be
maximised by
allowing Qantas
to acquire Aus
tralian".
Ward says I
there will be ]
some "re-align
ment" of Aus
tralian's opera- Australian to lose identity in Qantas merger
tions, which
may include taking over some
domestic c?r: regional services
from Qantas.
Meanwhile, the Australian and
New Zealand Governments are
expected to sign a memorandum
of understanding (MoU) soon,
in which they will agree to have
a single trans-Tasman aviation
market by November 1994. A
joint statement by the respective
transport ministers on 3 June
said that agreement had already
been reached on most issues.
The MoU will call for a formal
treaty by June 1993, with both
sides agreeing "...to establish, as
soon as possible, a totally dereg
ulated aviation market between
the two countries". They will
also adopt "...an approach to
would include considerably ex
panded rights for airlines of
both countries in other interna
tional markets".
The first steps include open
ing a number of trans-Tasman
city pairs to domestic carriers
from November 1992, with a
gradual expansion over the next
three years. Simultaneously, air
lines from both countries will be
allowed "...to progressively in
crease the number of destina
tions served and flights offered
in markets beyond each coun
try", the ministers say.
Air New Zealand, of which
Qantas owns 19.9%, is one of
the foreign carriers believed to
be interested in buying part of
Qantas, along with British Air-
external aviation policy which ways and Singapore Airlines. •
Anglo-French space merger imminent
The merger of British Aero space's space business with
Matra Marconi Space is set to be
announced within weeks, fol
lowing BAe's axeing of 640 satel
lite manufacturing jobs. BAe is
set to take a small share in the
post-merger space company.
The job losses, from the Cbm-
munications Satellites division
of BAe Space Systems, were an
nounced on 3 June.
Matra Marconi shareholder
GEC says of the move: "This is
another step towards the possi
ble integration of Matra Marconi
Space and BAe's space business.
These talks are still ongoing."
Matra Marconi Space is
mainly interested in BAe Space
Systems' other division, Earth
Observation and Science. In par
ticular, the remote-sensing capa
bilities of the division would be
consistent with the growth of
Matra Marconi Space's business,
say senior officials.
BAe Space and Communica
tions, the holding company for
BAe Space Systems and BAe
Communications, was disbanded
earlier this year (Flight Interna
tional, 6-12 May) with the loss
of about 34 managerial and sup
port positions.
• GEC has announced cuts in
its workforce, with over 800
defence-related jobs going. The
closure of the Marconi . Radar
and Control System factory at
Chelmsford, near London; will
result in the loss of 600 jobs,
while 225 will go at GEC-
Marconi Communications. •
GE to appeal on
DoD suspension G
eneral Electric (GE) Air
craft Engines is to appeal
against the US Department of
Defense's suspension of con
tract awards to the company.
The Pentagon's move, related
to an Israeli procurement scan
dal which led to General Rami
Dotan, the Israeli air force's
head of logistics and engineer
ing, being jailed for 13 years, is
unlikely to have much material
effect on GE's business.
The company issued a
strongly worded statement nev
ertheless, declaring: "This deci
sion was taken without warning
by a single person in the De
fense Logistics Agency [DLA]
and without appropriate proc
ess for GE or for the affected
branches of the armed services."
The US announcement was
immediately followed by a simi
lar Israeli ruling at the request
of the Pentagon.
Israeli F-16s are powered by
GE's F110 engine, but Israeli
sources say there are adequate
spares to ensure the air force
does not suffer. One source
comments: "In special cases we
will rely on the US Air Force to
solve short-term problems that
may arise."
In the USA, the decision
could affect the award of con
tracts related to the F414 for
the F-18E/F, but there is little
doubt that GE will retain the
business as sole source.
Neither the USA nor Israel
has put a time limit on the
suspension, but the Pentagon
has stressed that GE can make
changes to satisfy the DLA.
Most Pentagon officials expect
the action to last for days or
weeks rather than months.
The Pentagon's criticism is
that GE did not act strongly
enough against its own staff
after the discovery that a mar?
keting employee, Herbert Stein-
dler, had diverted US Govern
ment funds. Steindler was fired.
GE says it has "...conducted
a complete internal investiga
tion, disciplined employees, im
proved systems relating to the
foreign military financing pro
gramme and co-operated fully
with the investigation by the
[US] Department of Justice". •
FLIGHT INTERNATIONAL 10 - 16 June, 1992 9